Analyst Says Benioff Not Going Anywhere Soon As Salesforce Appoints Co-CEO

Last night, Salesforce (CRM) appointed Keith Block as its co-chief executive officer, joining Marc Benioff, who will remain the Chairman of the board. Commenting on the news, Jefferies analyst John DiFucci told investors he does not believe Benioff is going anywhere soon, but the company is well positioned if he decided to do so. CO-CEOS: Salesforce announced yesterday that the company's board has promoted Keith Block to co-CEO. Block now reports to Salesforce's Board of Directors and remains a member of the board. Block served as Salesforce's Vice Chairman, President and as a Director since joining the company in June 2013, and most recently served as the company's COO since February 2016. In their respective roles as co-CEOs, Benioff, who continues as Chairman of the Board, will lead Salesforce's vision and innovation in areas including technology, marketing, stakeholder engagement, and culture. Block will lead the company's growth strategy, execution, and operations.

CO-CEO BENIOFF LIKELY NOT LEAVING: In a research note to investors following the news, Jefferies' DiFucci said he does not believe co-CEO Marc Benioff is "going anywhere soon". However, Salesforce is well positioned if he decided to do so, DiFucci added. Overall, DiFucci views the news as a "much deserved promotion" for Block, as he is "rightfully credited with transforming" Salesforce into a company that enterprises view as a strategic partner. The analyst also noted that this action appears logical as the number of responsibilities have increased for the management team as the company looks to grow toward its future 2022 target of $23B in revenue while also integrating MuleSoft. While DiFucci acknowledged that co-CEOs can sometimes cause confusion within a company, he believes that this is unlikely in this circumstance given the clear delineation of roles, which also happen to play to each co-CEO's strengths. He reiterated a Buy rating and $155 price target on Salesforce shares.

KEY MAN RISK: Earlier this week and before Salesforce's announcement, Morgan Stanley analyst Mark Savino told investors that the recent increase in CEO turnover highlights the importance of understanding "key man" risk, and identified companies that he believes are most exposed to it. The analyst noted that about 12% of CEO jobs among S&P 500 companies turned over in 2017, which was the highest level of CEO departures since before the financial crisis. The 59 stocks of S&P 500 companies that had CEOs depart in 2017 underperformed the market by 11% over the next 12 months, or since the departure for instances that were less than 12 months ago, Savino added. Salesforce was one of the companies identified by the analyst and his team as one of those facing the greatest level of "key man risk". Other names on the long list include Boeing (BA), Tesla (TSLA), Coca-Cola (KO), Monster Beverage (MNST), Microsoft (MSFT), Amazon (AMZN), Activision Blizzard (ATVI), Facebook (FB), Alphabet (GOOGL), Apple (AAPL), Square (SQ), Broadcom (AVGO) and Nvidia (NVDA).